How Should Obama Run GM?


Commenters in my last piece on the government's GM intervention argued that the Obama administration was certainly going to micromanage the company, despite its promises not to, because it's morbidly interested in a future of fuel-efficient cars. There are plenty of smart reasons to be nervous about lawyers and economists running a manufacturing plant, but what is the argument for Obama to have no influence over GM?

He owns 60% of the company -- certainly he should have the right to approve more than 0% of its corporate strategy. Even if Obama has promised a hand-off approach, he's still likely to use his free hands to point GM toward certain values, like shifting away from trucks toward fuel-efficent cars. The 1990s and early 2000s was a world in which oil was inexhaustible and cheap and its gluttonous consuption was somewhat of a national right. So this happened (see below) and the nation's foremost car company stopped being a car company with trucks and became a truck company that also made some cars.
carstrucks.png This graph shows truck production eclipsing cars just before the turn of the century, and GM remains historically trucky-heavy to this day. I can't say how dramatically GM's leadership wants to change that, but Obama has made clear what he wants from a restructured GM: a company that can compete in a future where oil is not like air, and fuel-efficient cars dominate the market. Like him, I just don't see how the road to long-term profit is paved with Cadillac Escalades.

As Atlantic contributor Ryan Avent points out today, rising oil prices are back in the news, as if to torment the memory of the Hummer as its humbled brand. Ryan writes: "We can never again count on consistently cheap oil, and so what can we do to protect ourselves economically?" Jennifer Granholm, in step with the president, blogs today in the Huffington Post that the only future for the decrepit Michigan manufucturing scene is green. I don't believe in micromanaging, but I do believe in macromanaging, and a car company without a realistic vision of future -- whether understood by the GM board or pressed by Washington to internalize it -- is not a car company worth saving.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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